Waiver of Homestead: Why am I signing this?

By
Services for Real Estate Pros with Mobile Notary Services
http://actvra.in/cb4

It's understandable that, anytime a borrower is asked to sign any kind of a waiver in their loan documents, there will be some concern. What kinds of rights are they giving up?

One of the documents that the borrower may encounter in their loan package is the Waiver of Homestead Exemption.  It is a document that requires notarization.

Many borrowers are not quite sure what a "homestead" is, or that there is such a thing as a "homestead exemption".  They are essentially signing away something that they didn't even know exists.  The following is an example of a Waiver of Homestead Exemption:

Waiver of Homestead Exemption

If you read the Deed of Trust, there will also be a provision in it with regards to waiving the homestead exemption:
_____________________________________________

Waiver of Homestead

_______________________________________

So why are they signing this Waiver of Homestead Exemption?

I am not an attorney, and may not give legal advice. I am a notary signing agent. I understand why they are signing it. But if the borrower asks me, I will have to refer them to their loan officer.

However, if the borrower understands what the homestead exemption is, and what it's all about, then they understand why the lender is requiring that they waive it. If the borrower defaults on the loan, the lender can foreclose and get to the first dollars of value in the property.  This is essentially why they are waiving the homestead exemption.

The applicable statutes that are cited in this Waiver of Homestead document can be found in the Colorado Revised Statutes under Title 38 - Property - Real and Personal

Title 38: Property - Real and Personal

and Article 41: Limitations - Homestead Exemptions

Article 41: Limitations - Homestead Exemption

See: CRS 38-41-201. Homestead exemption - definitions

CRS 38-41-201 Homestead exemption - definitions

It is a quite lengthy definition - approximately 5 pages.

Also cited was C.R.S. 38-35-118(2)

CRS 38-35-118 Homestead, how conveyed

These are sources the borrower can turn to for a better understanding of the 'Homestead Exemption', if they want to do the research.

Source: LexisNexis(TM) Colorado Revised Statutes

 

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Rainer
8,977
Harold B. Lampasso
Leader One Financial - Colorado Springs, CO

I know this is an old post, but in 6 years of doing loans in Colorado I have never come across this... till yesterday on a refi.

November 09, 2010 07:55 PM #1
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Rainer
164,577

Leon Austin

Colorado Springs Mobile Notary
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